Hi there, Alex Kidman talking to you today about the difference between a prepaid and a contract mobile phone plan. Now in both cases, you’re actually going to be signing up for a mobile phone contract. There’s still a certain amount of paperwork to do, you’ve got to identify yourself, and you are committing to a certain quantity of spend. The key difference between these two types of contract however, is in the way that you pay. Typically, these days you’ll get unlimited calls and texts, but you’ll also get a data quota. Once you’ve used that data quota up on a prepaid plan, that’s it, no more data, unless you buy some more. On a contract plan, however, you can go into excess usage. And this will typically attract a price of $10 per gigabyte or part thereof you use, over whatever the quota on your plan is. Now, there are benefits to both arrangement.

Obviously prepaid allows you to control your mobile spend more discretely, because you can never spend over what you’re already given your telco. Whereas on a contract plan, you can use more data if you need to, without having to particularly worry about whether or not you are going to run over quota, or whether or not something you’re doing is suddenly going to stop because you’ve run out of quota. Typically speaking as well, contract plans are the ones where you can get, but you don’t have to, a supplied handset with your plan. Whereas prepaid plans exclusively assume that you already have a mobile phone handset that you’re going to use with it. Prepaid plans are great if you’re on a tight budget, and of course to control the network that you’re on, because prepaid plans only commit you for whatever period that you pay your telco for.

If after your 28 days or 30 days, you think “No I’m not happy with this provider”, or you just see a better deal, you’re free to switch over to that. And they’re obliged to let you take your mobile number with you. Contract plans, on the other hand, are a great way to break down the cost of a mobile handset. With premium phones these days costing well over $1,000 that’s not the kind of money that you’re likely to just have sitting around in your pocket. And if you do, it’s probably not a concern to you to spend that much on a phone outright. With a contract plan, you’ll typically pay handset repayments each month, on top of whatever your contract provision is. Because you’re signing up with a telco for a longer period, they’re usually slightly more generous in terms of data provisions, and other bundled goodies like entertainment, and quota-free streaming, than they are on prepaid services.

Contract plans are generally slightly better if you’re planning to travel internationally, because usually there are ways that you can use your service more easily overseas and at lower cost. Whatever you do though, if you are planning to travel internationally, make sure you check with your telco what they will charge you. You can typically use most contract services, and indeed a lot of prepaid services overseas, but the rates can be exorbitant if you don’t pre-buy a pack or a range roaming deal with your carrier up-front. As always, if you’re keen to know more about mobile plans, if you want to find the latest and greatest phones or the latest and greatest phone deals, because you’re looking to save some money.